Then comes the increase in input costs such as cement and steel and the fourth is the increasing rate environment and the currency depreciation that has hit developers who borrowed locally and overseas, alike.
“Prolonged delay is seen mostly in tier 2 and 3 cities where developers have launched the project and due to market conditions they failed to sell. Certainly, consumption pattern of the local market is very important for real estate development as most of housing requirement is local or from peripheral areas. Large projects in tier-2 or tier-3 cities are facing huge problems due to slow movement of inventory,” says Navin Raheja, president, National Real Estate Development Council.
BARGAIN HARD, BARGAIN WELL
Given that delays are par for the course, there is another less explored arena — the resale market — that has the prospect of good deals, especially if the purchase decision is geared towards end-use.
“People who invest in depressed markets are always in advantageous situation and make good returns on capital investment despite paying higher interest rates,” says Raheja.
The current slowdown in demand and high interest rates has also hit investors hard and this segment of the buyers are losing their holding power and are looking to offload them as soon as possible, says a director of a leading brokerage who declined to be identified. The only participants in the market now are end-use buyers and for them, the situation looks promising. Unverified data from industry sources point to a decline in the range of 10-25 per cent across metropolitan markets.
“This is mainly due to the inability of investors to keep up with high costs. Most were looking to cash in on the boom, and have now put their houses up for sale,” says Advitiya Sharma, co-founder, Housing.co.in, a real estate portal. Sharma adds that the number of resale listings covering metropolitan markets across major portals has gone up by 30 per cent over the last six months.
Kumar too agrees that the resale or secondary market has good opportunities but buyers should factor in higher capital requirements and also additional costs.
“Secondary market in current